Landlord and tenant – Lease of retail unit in shopping centre – Service charges – Costs of promotion – Claimant tenant liable to pay service charge in respect of costs of promoting the centre – Defendant landlord to bear 50% of such costs – Provision of entertainments, Christmas decorations and large-screen television presentations in centre – Whether these “forms of promotion” within meaning of service charge provisions – Preliminary issue determined in favour of defendant
The claimant held a lease of retail premises in a large shopping centre. The service charge provisions in the lease required the claimant to pay a contribution to the defendant landlord in respect of various services, including that of “providing Promotion”. However, the landlord was to bear 50% of the “cost of Promotion”, and the amount chargeable in respect of the cost in each service charge period was capped at 10% of the total net service charge. “Promotion” was defined as “advertising and other forms of promotion of the Centre intended to bring additional custom to the Centre”.
A dispute arose between the parties as to whether various items were properly to be regarded as promotion, namely: (i) entertainments in the centre, including jazz bands, string quartets and a children’s creche and play area; (ii) Christmas decorations and a Santa’s grotto; and (iii) the “Sky Wall”, a large permanent television screen that was mounted in the food court, which showed information concerning the centre and advertising by its retailers. The claimant contended that the items fell within the definition of promotions such that the defendant had to bear 50% of the cost of providing them and the 10% cap applied. The defendant disagreed. The claimant brought proceedings, in which that question was determined as a preliminary issue.
Held: The preliminary issue was determined in favour of the defendant.
The definition of “promotion” in the lease to include “other forms of promotion of the Centre” indicated that the term was not confined to advertising but included other elements that could properly be said to constitute a form of promotion. The relevant clause used ordinary English words and, rather than attempting to find a comprehensive, all-embracing definition of what was meant by a form of promotion, the question was whether the disputed matters fell within the ordinary understanding of that phrase. The commercial purpose of the relevant provisions did not require a departure from the ordinary meaning of the language used. It was possible to distinguish between something that was promoting the centre and, on the other side of the line, something that was instead a service, facility, amenity or attraction within the centre. The entertainments, Christmas decorations and Santa’s grotto were properly regarded as a facility, amenity or attraction rather than a form of promotion. The provision of the Sky Wall also fell on that side of the line. However, so far as costs were incurred in using the Sky Wall to provide advertising and information concerning the centre generally, as distinguished from advertising individual retailers and restaurants, that function fell within the phrase “other forms of promotion of the Centre” and was a cost of promotion that the defendant had to share.
Kirk Reynolds QC (instructed by Shoosmiths, of Nottingham) appeared for the claimant; Michael Barnes QC (instructed by Walker Morris, of Leeds) appeared for the defendant.
Sally Dobson, barrister
